By Luisa Maria Jacinta C. Jocson, Reporter
BANK LENDING continued to post double-digit growth in June, the Bangko Sentral ng Pilipinas (BSP) reported.
Outstanding loans of universal and commercial banks rose by 10.1% year on year to P12.09 trillion in June from P10.99 trillion a year ago, preliminary data from the BSP showed.
The June growth rate was unchanged from May’s pace, which was the fastest since the 10.2% recorded in March 2023.
On a seasonally adjusted basis, big banks’ outstanding loans inched up by 0.4% month-on-month.
The growth in outstanding loans to residents slightly slowed to 10.1% in June from 10.2% in the previous month, while the increase in loans to nonresidents picked up to 9.8% from 8.1% in May.
Central bank data showed that outstanding loans for production activities accounted for the bulk or 85.6% of overall lending.
Loans for production activities rose by an annual 8.3% in June to P10.3 trillion, a tad slower than the 8.4% growth in May.
The year-on-year growth was mainly driven by increases posted in loans for transportation and storage (26.2%), real estate activities (12.3%), wholesale and retail trade, and repair of motor vehicles and motorcycles (9.3%), manufacturing (8.9%) and air-conditioning supply (5.7%).
Meanwhile, consumer loans to residents jumped by 25% year on year to P1.4 trillion in June. However, this was slower than the 25.6% expansion seen in May.
Broken down, increases were seen in credit card (28.8%), motor vehicle (20.7%), and salary-based general purpose consumption loans (17.4%).
“It seems there is some marked resilience on demand for financing. It’s double-digit and sustained. It’s a good sign for second-quarter GDP (gross domestic product) growth. It is also aligned with financials and how they have performed for the first half so far,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said in a Viber message.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the steady increase in credit recorded in June is a “good sign for the economy as a bright spot” as it was faster than the GDP growth seen last quarter.
Philippine GDP expanded by 6.3% in the second quarter, the government reported on Thursday. This was faster than the revised 5.8% growth in the first quarter and the 4.3% clip a year ago.
Economic growth averaged 6% in the first semester. The government is targeting 6-7% GDP growth this year.
“It is interesting to note that loan growth has always been faster than GDP growth for many years and decades, though the gap has narrowed in recent years, especially since the COVID-19 pandemic, as bank loan growth came from double-digit levels especially before the pandemic,” Mr. Ricafort added.
“This is also consistent with the continued recovery of many businesses, especially those that were hit hard since the pandemic, such as local and foreign tourism, MSMEs (micro, small and medium enterprises), other services industries, among others, moving closer to, if not exceeded, pre-pandemic levels.”
However, Mr. Ricafort noted that elevated interest rates have continued to dampen demand for credit. The Monetary Board has raised borrowing costs by a cumulative 450 basis points from May 2022 to October 2023, bringing its policy rate to an over 17-year high of 6.5%.
It will hold its next rate-setting meeting on Aug. 15.
MONEY SUPPLYMeanwhile, separate BSP data showed that domestic liquidity (M3) grew by 6.6% in June, slightly faster than the 6.5% increase posted in May.
M3 — which is considered as the broadest measure of liquidity in an economy — rose by 6.6% to P17.5 trillion in June. Month on month, M3 inched higher by 0.5%.
Domestic claims increased by 10.5% in June, slower than the 10.7% expansion in May.
Broken down, net claims on the central government rose by 12.1%, also slightly slower than the 12.2% in the previous month.
The BSP said this was due to the “sustained borrowings of the National Government and the decline in its deposits with the BSP.”
Claims on the private sector grew by 11.7% in June from 11.6% a month earlier, mainly due to the “continued expansion in bank lending to non-financial private corporations and households.”
Net foreign assets (NFA) in peso terms went up by 8.3% in June from 4.9% in May.
“The BSP’s NFA grew by 12.3%. Meanwhile, the NFA of banks contracted on account of higher bills and bonds payable,” it added.